Responding to a request from the New York state Education Department, the Tonawanda City School District Board of Education adopted a fiscal stress corrective action plan Tuesday night.
The Education Department’s Office of Audit Services recently wrote the district requesting that Tonawanda put more money into its fund balance, Superintendent Barbara Peters said.
School districts and local governments use their fund balance, which is a sort of savings account, as a reserve fund to pay for unbudgeted expenses that may arise during the year.
“What many districts do is to raise taxes a little higher in order to maintain what is called a healthy fund balance,” Peters said.
Tonawanda currently has $600,000 in its fund balance, but, in years where the district received little state aid, the balance has dipped below $50,000.
Peter Michaelsen, the district’s assistant superintendent for business and finance, told the state Education Department that the city schools’ finances are expected to improve dramatically by the end of June.
“Our review of the April year-to-date reporting period indicates that the June 30th fund balance is projected to be $1.3 million or 4.21 percent of the adopted budget,” Michaelsen wrote in the district’s corrective action plan.
“This represents a very dramatic improvement over the $837,545 fund balance reported in June 2007.”
This year, the state began advising school districts to have fund balances totaling 3 percent of their budget. In years past, it was 2 percent. For a district whose budget totals $30 million, the state would like to see $900,000 in its fund balance, Michaelsen said, adding that Tonawanda has kept its fund balance low in years past to help maintain a tolerable tax rate for district residents.
“To have a fund balance that large would have been a pretty hefty tax increase to the community,” School Board President Jim Weber said of the state’s recommendation.
In the corrective action plan, Michaelsen reported that the district is doing a number of things that will improve its fund balance, including conserving utilities, moving to a new type of health insurance that will reduce premium increases, and entering into a shared services initiative with the City of Tonawanda to examine ways to streamline operations.
In addition, Tonawanda is establishing an education foundation for next year that district officials say will provide the district greater levels of funding through grants and philanthropic organizations. Also, the district is moving its administrative offices to the secondary complex and is looking to sell the current facility on Broad Street.
In other business Tuesday, the School Board:
n Heard Peters report that Middle School Principal James Newton is recovering in Mercy Hospital after suffering a heat attack Monday. He may be released from the hospital and return to work as early as Monday.
n Heard Peters say that the district has received 49 applications for its assistant superintendent for pupil personnel services position and 26 applications for the high school principal vacancy.
Contact reporter David J. Hill at 693-1000, ext. 115.
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